Administrative Regulations on Futures Trading (2007)
Administrative Regulations on Futures Trading (2007)
Administrative Regulations on Futures Trading (2007)
Order of the State Council [2007] No. 489
March 6, 2007
The Administrative Regulations on Futures Trading has been adopted at the 168th executive meeting of the State Council on February 7, 2007. The Regulations is hereby promulgated and shall come into effect as of April 15, 2007.
Premier Wen Jiabao
Administrative Regulations on Futures Trading
Chapter I General Provisions
Article 1 These Regulations are formulated for the purposes of regulating futures trading, strengthening the supervision over and administration of futures trading, maintaining the order of futures market, preventing risks, protecting the lawful rights and interests of all futures trading parties involved and public interests and promoting positive and steady development of the futures market.
Article 2 The present Regulations shall be observed by all entities and individuals engaged in futures trading, including commodities contracts, financial futures and options contracts trading, and other related activities.
Article 3 To conduct futures trading, one shall follow the principles of openness, fairness, justice, and good faith. Illegalities, such as fraud, insider trading, and manipulation of futures trading prices, shall be forbidden.
Article 4 Futures trading shall be conducted in futures exchange(s) established according to the law or in other trading places approved by the futures regulatory institution of the State Council.
No futures trading is permitted in any place including similar places other than those approved by the futures regulatory institution of the State Council.
Article 5 The futures regulatory authority under the State Council shall carry out centralized and unified supervision over and administration of the futures market.
The dispatched offices of the futures regulatory authority under the State Council shall perform their duties of supervision and administration according to relevant provisions hereof and the authorization of the futures regulatory authority under the State Council.
Chapter II Futures Exchange
Article 6 The futures regulatory institution of the State Council shall be responsible for the assessment and the approval process for the establishment of a futures exchange.
No entity or individual may set up any futures exchange or organize any futures trading and other related activities in any form without permission from the futures regulatory institution of the State Council.
Article 7 A futures exchange shall not run for profit-making purposes and shall carry out self-discipline administration according to its own bylaws. A futures exchange shall assume civil liabilities with all its property. The person in charge of a futures exchange shall be appointed and removed by the futures regulatory authority under the State Council.
The administrative measures for a futures exchange shall be formulated by the futures regulatory authority under the State Council.
Article 8 A member of a futures exchange shall be the enterprise legal person or any other economic organization registered in the territory of the People's Republic of China.
A futures exchange may implement the member grading clearing system. The members of the futures exchange that implements the member grading clearing system are composed of clearing members and non-clearing members.
The eligibility for clearing transactions of a clearing member shall be approved by the futures regulatory institution of the State Council. The futures regulatory institution of the State Council shall, within three months of receiving the application, make a decision to approve or reject the application for the clearing member's eligibility for clearing business.
Article 9 A person who is any one specified by Article 147 of the Company Law of the People's Republic of China or any one stated below shall not hold the post of the person in charge of or an accountant of any futures exchange:
1. The person who was in charge of a futures exchange, securities exchange, or securities registration and clearing institution, was a director, supervisor, or senior executive of a futures company or securities company, or was any other person specified by the futures regulatory authority under the State Council, having been removed from that office for less than five years for unlawful act or disciplinary offence; or
2. A lawyer, certified public accountant, or professional of an investment consulting organization, financial consultant organization, assets evaluation organization, or verification organization, whose qualifications for lawyer, certified public accountant, or professional have been suspended for less than five years for unlawful act or disciplinary offence.
Article 10 A futures exchange shall formulate and perfect all rules according to these Regulations and the provisions of the futures regulatory authority under the State Council, and intensify the control of trading risks and the supervision over and administration of members and its staffs. A futures exchange shall perform the following duties:
1. Providing futures trading floor, facilities and services;
2. Designing futures contracts and arranging the listing of such contracts;
3. Organizing and supervising futures trading, clearing and delivery;
4. Ensuring the implementation of contracts;
5. Supervising and managing the members according to the bylaws and trading rules; and
6. Other duties stipulated by the futures regulatory authority under the State Council.
A futures exchange shall not participate in any futures trading directly or indirectly. Without the verification of the futures regulatory authority under the State Council and approval of State Council, a futures exchange shall not conduct any businesses, such as trust investment, stock investment, and investment in real property that is not for self use, which are unrelated to its duties.
Article 11 A futures exchange shall establish and improve the following risk management systems according to relevant provisions of the state:
1. A security deposit system;
2. A daily debt-free clearing system;
3. A limit up and down system;
4. A position limits and large position reporting system;
5. A risk reserve system; and
6. Other risk management systems stipulated by the futures regulatory authority under the State Council.
A futures exchange that implements the member grading clearing system shall formulate and perfect the system of clearing guaranty money.
Article 12 When there are any abnormal conditions on the futures market, a futures exchange may adopt the following emergency measures in accordance with the authority and procedures stipulated in its bylaws, and it shall promptly make a report to the futures regulatory authority under the State Council:
1. To increase the security deposit;
2. To adjust the range of limit up and down system;
3. To limit the maximum positions of members or customers;
4. To temporarily suspend trading; or
5. To adopt other emergency measures.
The abnormal conditions mentioned in the preceding paragraph refer to manipulation of futures trading prices in the course of trading, force majeure, or other circumstances stipulated by the futures regulatory authority under the State Council.
After the abnormal conditions disappear, the futures exchange shall promptly cancel the emergency measures.
Article 13 A futures exchange shall obtain the approval of the futures regulatory authority under the State Council:
1. If it formulates or amends its bylaws or trading rules;
2. If it lists, suspends, cancels or revives a futures trading product;
3. If it lists, amends or terminates a futures contract;
4. If it changes its domicile or business premises;
5. If it is merged, demerged, or dissolved; or
6. If it handles other matters specified by the futures regulatory authority under the State Council.
To approve the listing of any new futures trading product by a futures exchange, the futures regulatory authority under the State Council shall seek opinions from relevant departments of the State Council.
Article 14 The proceeds of a futures exchange shall be managed and used according to relevant provisions of the state, but it shall be used first for ensuring the operation and improvement of the futures trading floor and facilities.
Chapter III Futures Companies
Article 15 A futures company is a financial institution that is established in accordance with the Company Law of the People's Republic of China and these Regulations and engages in futures businesses. The establishment of a futures company shall be subject to the approval of the futures regulatory authority under the State Council and registration with the company registration authority.
Without the approval of the futures regulatory authority under the State Council, no entity or individual may establish or establish in disguised form any futures company to conduct futures businesses.
Article 16 To establish a futures company, one shall comply with the provisions of the Company Law of the People's Republic of China and shall also:
1. Have a minimum registered capital of CNY30 million;
2. Have director, supervisor, senior executive and futures practitioner who have obtained relevant qualifications;
3. Have articles of association stipulated by relevant laws or administrative regulations;
4. Have a major shareholder and actual controller that have sustainable profitability, and good reputation, and have no records of serious violation of laws or administrative regulations in the last three years;
5. Have qualified premises and facilities of business;
6. Have formulated sound risk management and internal control systems; and
7. Meet other conditions as may be stipulated by the futures regulatory authority under the State Council.
The futures regulatory authority under the State Council may increase the minimum amount of the registered capital according to the principle of prudent supervision and risk of a specific business. The registered capital shall be paid-in capital. Each shareholder shall make capital contribution in cash or by any non-monetary property that is necessary for the business operation of the futures company and the ratio of the capital contribution in cash shall not be less than 85%.
The futures regulatory authority under the State Council shall, within six months after accepting the application for establishing a futures company, carry out examination and make a decision on whether to approve the establishment according to the principle of prudent supervision.
Without the approval of the futures regulatory authority under the State Council, no entity or individual may entrust, or be entrusted by, any other person to hold or manage the shares of a futures company.
Article 17 A futures company shall implement the licensing system and the futures regulatory authority under the State Council shall be entitled to issue licenses according to the category of commodity futures and financial futures. A futures company may apply for operating the overseas futures brokerage, futures investment consultation, and other futures businesses as may be specified by the futures regulatory authority under the State Council, in addition to domestic futures brokerage.
Unless as otherwise specified by laws, administrative regulations, or the futures regulatory authority under the State Council, a futures company shall not conduct any activity that is unrelated to futures.
A futures company shall not conduct or conduct in disguised form futures proprietary business.
A futures company shall not provide financing for its shareholder, actual controller, or any other affiliate or guarantee for any person externally.
Article 18 A futures company may be entrusted by a customer to conduct futures brokerage and to conduct futures trading on its own name for the customer, and the trading results must be assumed by the customer.
Article 19 A futures company shall obtain the approval of the futures regulatory authority under the State Council if:
1.
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